Page 32 - MetalForming April 2015

To Whom Much is Given, Much is Expected
Continuous Innovation and a Sound Business Plan
Bill Smith’s father started Termax in 1971, out of the family home in Arlington Heights, IL. He owned one die, and claimed a small handful of customers. Bill and his brother Mike (co-owner and co-CEO of Termax) assembled parts in their garage to help launch the company.
“My dad knew how to sell terminals,” Smith says, “and with customers (for our stamped brass terminals) like Whirlpool and GE, we quickly outgrew the garage.”
As Termax was on the move, from the garage and into new digs in northeast Illinois, so was Smith. After earning his degree in accounting from the University of Illinois and then becoming a certified public account-
ant, Smith started his own CPA firm in Arlington Heights, at the age of 24.
“I was in a hurry to grow up and make a name for myself separate from my father’s company,” he says. Five years later he sold the company and launched a second CPA firm, this time in Elkhorn, WI.
In 1998, Smith heeded a call from
his father to come home and help run
Termax. His brother Mike came along as well—Mike had previously worked for Termax for 10 yr. in a variety of roles including sales and engineering.
“He knew the products and the customers,” Bill Smith says of Mike. “It was his passion, and he could help drive and manage the top line. My task was to learn all I could from him and others about our business, and develop a sound business plan to drive growth while managing the bottom line.”
Since the Smith brothers took the reins of Termax in 2001, the company has taken off, “mostly due to introducing the right mix of new products,” says Bill, “as well as continuous innovation and a sound business plan. We’ve been in three dif- ferent locations since 2001, finally settling here in Lake Zurich in 2007 in a 120,000-sq.-ft. facility.”
The competitive advantage that helped foster such significant growth has been a relentless dedication to specialization—in multislide forming, molding and over- molding and assembly of automotive fasteners. Some 30 percent of the firm’s met- alformed parts receive some type of mating plastic component.
The Smiths seek to acquire used multislide machines (Termax operates more than 60 of the machines now) for $5000 to $10,000 apiece, invest $20,000 to $30,000 to upgrade each machine, and follow a strict maintenance regimen to ensure the machines meet production expectations. Via state-of-the-art controls and automation, one operator can manage eight to 12 machines, and the compa- ny’s material-service center provides tip-to-tail welded two- and three-up coils to minimize changeovers.
“Typically, just-in-time production doesn’t fit our requirements,” Smith says. “We often have a 2-hr. window to deliver to customers, so we take our top 100 products and inventory them. To further facilitate that business model, last year we installed a top-end automated storage and retrieval system.”
Onward and upward for Termax—in 2013 the firm manufactured 850 million parts, and last year it manufactured 1.2 billion parts. The projection for 2015 is 1.5 billion parts.
An attitude starts at the top—I love what we do.”
The 3M Way to Innovation: Balancing People and Profit
The third and final leg to Smith’s business plan for Termax rounded into shape when he studied closely the story of Minnesota Mining & Manufactur- ing (3M).
“3M has a tolerance for tinkerers,” one company executive wrote, “and a pattern of experimentation.”
Another executive wrote:
“3M’s success was built on unique products—products that were pro- tected by patents.”
At Termax we find a similar devotion to innovation. “3M sought to have at least 70 percent of everything it manu- factured having been invented by its employees,” Smith says. “That’s been our goal as well, and we’ve surpassed it. By asking our employees to ‘think like engineers’ and to focus on creativity and innovation, 75 percent of every- thing we manufacture is proprietary— products that no other company sells to the market.”
Smith also emulates one other attribute of 3M’s leadership: a perfect segue to his theme of giving back to the industry. Consider this quote attrib- uted to Kay Grenz, former vice presi- dent of human resources at 3M, from the book “A Century of Innovation: The 3M Story:”
“Mentoring is an established part of the fabric of 3M and one of the key reasons why the culture has been sus- tained for so long.”
Core Beliefs
Smith names several prominent, savvy and smart PMA executives who showed him the ropes and took him under their wings when he became involved with the association. He’s committed, as part of his aim to give back, to develop a formal way to offer those same opportunities to others in the industry looking for guidance. Hence the formal mentoring program on his PMA wish list.
“I’d like to set up a system at PMA of
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